A forensic audit of the Montclair Public Library’s budget found problems including more than half a million dollars in overstated expenses, and recommends several practices consultants say will smooth the budgeting process going forward.

Among them, the consultants told the Montclair Township Council last week, the library should come up with a baseline budget for only the funding state law requires it receives — even though Montclair has historically provided hundreds of thousands of dollars past that amount. Any spending above the statutory requirement should be presented separately with a detailed analysis to aid in transparency, they said. And the consultants recommend separate budgets for Montclair’s main branch and its Bellevue Avenue branch.

Library Director Peter Coyl, who compiles the budget, told Montclair Local he just received the audit on Friday, Oct. 15, and could not comment on the details of the report. But he said library officials would respond to the council on the findings, some of which he called unfactual.

The Montclair Township Council, which authorized the $31,500 audit, heard the report by Bob Benecke of Benecke Economics and David Gannon of PKF O'Connor Davies at its Oct. 19 council meeting.

“Oftentimes when we do a forensic audit we don’t necessarily find fraud or abuse, however often enough we do find areas, we identify areas for improvement, and that’s what we found here as it relates to the library,” Gannon said.

By state statute, municipalities are required to provide their libraries with a certain minimum level of support based on their property tax bases — known as the “third of a mil” formula, where a “mil” is 1/10th of a cent. In Montclair this year, that worked out to $2,680,152.

But for decades, the library has requested  and received several hundred thousand dollars more than the required amount. In recent years budget negotiations have become contentious when library officials presented the township council with budgets that went above the statutory number. The pandemic brought about more questions in relation to the library’s budget, and prompted steep cuts to planned funding for 2020. Twenty-one part-time staffers were let go in October of that year.

The pandemic shut down both the branches in March 2020. In June of that year, the main branch began curbside pickup and opened some in-person services to patrons in October.

But the Bellevue branch didn’t reopen until in June of this year, with hours cut back, after budget negotiations ended with the library receiving about $420,000 over the statutory limit, according to Benecke. 

Library officials were not able to provide an accounting of cost savings for the closure of the Bellevue Library and from the change in operations and programs from in-person to virtual, Gannon said. The library also continued to pay $4,923 annually to ACB Services for cleaning while the facilities were closed, he said.

Coyl told Montclair Local the library retained the cleaning service because staff still went into the building and there was concern about keeping the facility as clean as possible during the pandemic.

The audit also found the library consistently over-budgeted “other revenues.” 

“In 2019, other revenues fell short by $160,000, and in 2020 fell short by $100,000,” Gannon said. “The 2020 budget also included a fund balance from the prior year of $300,000 as revenue.”

The 2021 budget included overstated expenses of $540,000 by improperly duplicating pension benefits by $280,000 and adding an expense labeled “Designated funds to transfers to 2022” of $260,000, the audit found. The 2021 budget also labeled $180,000 of transfers from 2020’s fund balance as revenues.

Mayor Sean Spiller said practices such as counting unspent dollars as revenue and fund balances as expenses distort the budget.

“The double pensions matter when we talk about monies that are needed. … When they are double listed, that artificially inflates costs that are needed. Potentially those dollars weren’t needed to move through the year,” he said.

The audit also recommended library officials seek more grant opportunities.

Coyl told Montclair Local that for four years in a row, the library successfully applied for grants through the American Library Association, but that this year it was turned down due to shifting priorities due to the pandemic.

For 2022, the library is expected to receive $2.7 under statutory requirements, Benecke said.

Gannon said it could take a few years to break budgets out for each of the library’s two locations. Benecke said that typically towns with multiple branches have similar programs and hours at each — not necessarily funding each branch at the same level, but putting them on “equal footing.”

Benecke suggested an agreement for the township and library to consider. That agreement includes equal access for the public to services and programs at each branch. He said each year, the library should send the township a budget update by Oct. 31 — detailing projected and actual costs to that point. Any changes to hours, programs or staffing would be presented to the township manager. The library would pursue all available grants. It would have statements for consistent policies, plans and programs at the two branches. Anticipated revenues in a library budget wouldn’t exceed the amount received in the prior year. And the library would break out separate budgets for the state-required funding and any extra funding asked of the township. 

“This will provide a more seamless and collegial budget process going forward,” Benecke said. 

Coyl said that after he prepares the budget, it’s reviewed by the library’s finance committee and its board.

He said that he is committed to work with the township in the future. Coyl also said he hoped library officials would be called upon to give a public budget presentation in the future, something they had not been asked to do in recent years.